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Sparring Over the Tax Bill

JOSHUA ROBERTS/Reuters

By Michael Rainey

April 25, 2018

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The Senate Finance Committee heard from supporters and critics of the new tax law in a hearing on Tuesday afternoon. There was little agreement to be found, with the Republican witnesses largely praising the new rules and the Democratic critics voicing numerous fundamental complaints. The difference was so stark that Sen. Rob Portman (R-OH) said toward the end of the hearing, replying to the critics, “I feel like I’m looking at an entirely different tax bill than we’re talking about here.”

Here are some representative comments from the witnesses:

“The Tax Cuts and Job Act has not only reduced taxes for businesses like mine; it has created an environment where more business owners feel confident to take the cash from the tax savings and invest it back into their businesses. For these reasons, I believe the Tax Cuts and Job Act is spurring business investment and therefore has set the stage for increased economic growth for years to come.” – David K. Cranston, Jr., small business owner

"The recent tax law made significant changes to the way the United States taxes multinational corporations on their crossborder income. The new legislation has, however, fundamentally botched general business taxation in order to ‘fix’ the international system. In fact, the new legislation failed to solve old problems of that system and also opened the door to new perversities." – Rebecca Kysar, Professor of Law, Brooklyn Law School

“Prior to the enactment of the TCJA, the U.S. tax code has not been overhauled in over 30 years. The tax code was widely viewed as broken – a conspicuous drag on the economy that chased U.S. firms overseas while suppressing investment here at home. Major elements of the TCJA, particularly the lower corporate tax rate, expensing of qualified equipment, and the broad architecture of the international reforms, should improve the investment climate in the United States. While it remains too early to assert with any degree of certainty what the TCA’s contribution to the economy will be, some indicators suggest a salutary response in investment, consistent with the economic theory underpinning the design of the business reforms.” – Douglas Holtz-Eakin, former director of the Congressional Budget Office

“Put simply, this tax bill fails a very basic test. Does it give us a tax system that generates enough revenue? The answer is ‘no.’ Either the tax cuts must be reversed and then some, or key commitments, investments, and services will have to give.” – David Kamin, Professor of Law, New York University School of Law